Hospital CEOs say the transition to value-based care is happening at a slower rate than expected, but health system CEOs continue to prepare for that transition. However, in the meantime, many are concerned about operating under two different payment systems—fee-for-service and value-based care, according to the Deloitte Center for Health Solution’s 2017 Survey of U.S. Health System CEOs.
The new survey, based on interviews with 20 hospital and health system CEOs, is a follow-up to the company’s 2015 survey of health system CEOs and found that the issues keeping hospital CEOs up at night include the future of Medicaid; moving towards population health; declining margins; finding, recruiting and retaining forward-thinking and adaptable health care leaders; keeping up with new technology and adapting to evolving consume expectations.
The survey respondents represent seven nonprofit hospital/health systems, seven academic medical centers, three faith-based nonprofit hospitals/health systems and three children’s hospitals.
Drilling down into population health and value-based care, the use of value-based payments is increasing due to policies such as the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), initiatives from the Center for Medicare and Medicaid Innovation, state Medicaid programs and, to some extent, private-sector health plans. Many surveyed CEOs state that population health management is the key to success under value-based care models.
Survey participants say the transition to value-based care is happening, but at a slower rate than initially anticipated. However, many of the CEOs surveyed report that they are developing and expanding innovative delivery and payment models, and are focusing on MACRA and physician activation. “Many CEOs also are looking into strategies to generate physician buy-in and encourage behavioral change, which will help them be better prepared for the transition to population health and value-based care,” the report authors wrote.
At the same time, many of the surveyed CEOs express concern about operating under two different payment systems—fee-for-service and value-based care—and having misaligned incentives. Moreover, moving towards population health and bearing financial risk likely will require a large patient population.
The report quotes a CEO of a large nonprofit health system, who says, “[Value-based care] is a major [concern], [but] it is moving backwards. We can’t find payers, whether it be insurers or businesses, who seem tremendously interested in moving in that direction. As a large integrated delivery system, I could be stuck between a Medicare payment system that rewards outcomes, and a commercial payment system that is stuck in a fee-for-service world. That makes constructing and managing and leading an organization like this challenging as the economic incentives will essentially point to polar opposite directions.”
Five of seven academic medical center CEOs say population health is a major concern, many other survey respondents consider it to be a moderate or minor concern, the survey found. “They indicate that a true population health ‘model’ does not yet exist. Many of these CEOs are more concerned about issues such as Medicaid cuts and shrinking margins,” the report states.
The interviews with CEOs also indicate that the CEOs of children’s hospitals are more likely than other CEOs to use innovative delivery and payment models such as accountable care organizations (ACOs), retail clinics, telehealth, and advanced nurse practitioners to manage their patients’ health.
Additionally, many CEOs think health plans that participate in Medicare Advantage will continue to emphasize value-based care, and that they can move health systems towards population health, the report states. Although a majority of providers are still reimbursed under FFS in Medicare Advantage, others have moved towards alternative payment models (APMs).
The survey also found that CEOs expect they will need to partner with other players to stay connected with patients. “For example, many hospitals and health systems are partnering with outpatient ambulatory care organizations and using technology such as telehealth to expand their reach. From triaging patients to urgent care clinics and collaborating with post-acute care (PAC) facilities to keep patients out of the hospital, these new relationships can turn traditional FFS on its head,” the report authors wrote.
Many hospital CEOs expressed uncertainty about how MACRA will play out, but see it driving population health and physician activation initiatives, the survey found. Hospital CEOs’ approaches to MACRA differ, with many CEOs who previously had acquired and invested in physician practices report being more engaged and prepared for MACRA implementation than other survey respondents.
However, several surveyed CEOs expressed concern that physicians are largely unaware of how MACRA would affect their practices. The CEO of a large nonprofit health system was quoted in the report as saying, “Depending on how it’s implemented and adjusted, it’s going to have a profound impact on our physicians' ability to continue to practice, succeed, or thrive. And, they don’t have the capabilities to manage the data, create the data, do what’s necessary day-to-day to change the delivery model. So, there’s a profound implication for our physician community that they are not capable already of delivering upon.”
Looking at physician activation, the Deloitte survey results indicate that respondents are using tools including clinical integration, employment contracts with incentives, ACOs and risk-sharing agreements, among others to better activate physicians in care delivery transformation.
Specifically, CEOs surveyed report they are:
- Creating or partnering with payers for alternative payment models, which could result in reduced cost and improved patient care
- Forming clinically integrated networks, partnerships, and infrastructure to support population health and create a referral base for tertiary partnering services
- Positioning their organization to work in a risk-sharing model with payers
- Emphasizing patient quality, safety, and experience
- Investing in appropriate technology that will help enhance patient care
- Changing the culture around patient access to physicians and developing communication skills at the staff and physician level.
CEOs surveyed agree that the industry is moving in this direction and, therefore, say their fellow CEOs should focus on the health outcomes and costs of their patient population. “CEOs tell us they intend to partner, grow business purposefully, and create incentives and support for physicians to operate under the new value-based model. Health systems preparing for value-based care and population health also should consider expanding their patient network and reach, as providers managing the care of larger populations likely will be able to better manage their margins and financial risk,” the report authors wrote.
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